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February 6, 2012

Greece Missed Bailout Deadline: EU Commission

Necessary decisions have not yet been made

Greece has already missed its Monday deadline to come up with a deal to satisfy the conditions for its second bailout, according to the European Union, and has failed to make the decisions that would finish the deal.

Reuters reported that Amadeu Altafaj, spokesman for the European Commission, said, "We have gone beyond the deadline already," adding that Greek authorities still needed to make the decisions that would allow the release of the second bailout package. As previously reported by AdvisorOne.com, the EU, International Monetary Fund and European Central Bank had set a series of conditions to be met by Monday for Greece to receive its next bailout, which it must have by March if it is not to default.

One of the obstacles has been a deal with private creditors, which the country was working on over the weekend. Even as that drama played out, still unresolved, Athens was battling itself as Bloomberg reported that Antonis Samaras, head of New Democracy, Greece’s second-largest party, said he would oppose some measures that the troika has insisted on. In the report, he was quoted saying, “They are asking us for greater recession, which the country can’t take. I will fight to avoid that.”

The buy-in by Samaras and other opposition leaders is crucial to approval of the next bailout. The troika wants assurances that after the next election, potentially scheduled for April, commitments made today will still be honored by the victorious party. Luxembourg’s Jean-Claude Juncker, who chairs euro finance meetings, was quoted saying Sunday, “If we determine that it’s all going wrong in Greece, then there won’t be a new program–and that means in March you’ll have a declaration of bankruptcy.”

An agreement for a writedown of debt by private creditors must be complete by Feb. 13 for formal presentation if all other processes are to be resolved prior to March 20, when the bond matures. If Greece fails to secure concessions and additional financing by then, it will default.

The country’s two largest unions said on Sunday that they will strike Tuesday against any further austerity measures. Ilias Iliopoulos, secretary general of public sector union ADEDY, said in the report, "Despite our sacrifices and despite admitting that the policy mix is wrong, they still ask for more austerity."